The Chamber authored its views on the use of
Section 5 in an article last September. In
it we examined the past use of Section 5, acknowledged the courts acceptance of
the FTC’s broad authority under the law, but also took note that the courts
have consistently found fault with the FTC enforcement under Section 5 citing in
many cases a lack of evidence and for failing to define the improper conduct
according to acceptable criteria. We concluded that the FTC’s use of
Section 5 should not be an antitrust enforcement “catch all” and should not be
used as a means of extending antitrust doctrine without clear guidelines
articulated in advance.

What does this mean for the Intel case?
And, if Intel has engaged in anticompetitive conduct, as the FTC alleges, why
isn’t this a Section 2 case?

The
U.S. Bureau of Labor Statistics has shown that the price of microprocessors has
fallen more rapidly than any of its other 1200 tracked segments, and the pace
of innovation and therefore the speed of microprocessors have undeniably
improved at a staggering rate. The FTC, however, argues that prices would have
fallen further faster, while at the same time outpacing the innovative advances
achieved in the last decade.

As a Section 2 case such an argument is hard
for the FTC to prove, but as a Section 5 case it becomes hard to defend oneself
against. Commissioner Rosch’s statement in the case spells this out
explicitly as he explains the rationale for using Section 5 because he believes
the real harm to consumers is simply the mere lack of choice, and does not rely
on an increase in price. Such a statement marks a significant departure
from a reliance on rigorous economic analysis and empirical evidence to support
enforcement findings.

Exploratory antitrust exercises are exactly
what U.S. authorities have advised other countries against pursuing for
decades. Now we seem to have forgotten our own advice. In addition, the
FTC case represents a potential government directed infringement on IP. The use
of antitrust enforcement with forfeiture of IP rights as a remedy is what we
have worried about in foreign jurisdictions, but the FTC’s complaint proposes
such a remedy here at home.

If Intel has engaged in abusive conduct then
the FTC should bring a Section 2 case. However, doing so translates into
a higher burden of proof standard, one in which the FTC looks to avoid by
making this a Section 5 case and taking advantage of its overly wide
interpretation of its authority. In doing so, the United States is
sending mixed signals internationally and undermining IP rights abroad.

Business above all requires transparent,
predictable, and relatively stable antitrust enforcement. If the FTC wants
to use Section 5 as a means of enforcement in expanded ways it should not be
done after clear guidelines have been establishment and well in advance of any
enforcement actions.